Simon Coveney (Cork South Central, Fine Gael)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"notes the potential and importance of the agriculture, fisheries and food industry to the Irish economy and in particular to support the implementation of Food Harvest 2020 and recognises that:

— agriculture and the agri-food sector is Ireland's most important indigenous industry and will play a central part in job creation and our export led recovery;

— the agriculture industry in Ireland has an annual output of approximately €22 billion accounting for more than 6% of GDP;

— industry exports are currently almost €8 billion on an annual basis with food and drink exports going to more than 160 countries;

— a total of more than 139,000 people are employed in the production of agri-food and fisheries products, which is approximately 7.5% of national employment;

— this sector supports 128,000 family farms and 600 food and drinks firms;

— a number of countries in Europe, including Ireland, narrowly missed exceeding their milk quota this year while other countries in Europe were 30% under quota this year;

— a political solution must be found to allow the expansion of the dairy industry pre-2015;

— Irish interests must be protected in discussions on the Common Agricultural Policy (CAP) post-2013 and in the Mercado Común del Sur (Mercosur) talks; and

— a comprehensive expenditure review is currently under way in the Department of Agriculture, Fisheries and Food; and

calls on the Government to:

— negotiate at an EU level to allow for the orderly expansion of the dairy industry in Ireland between now and the ending of milk quotas in 2015;

— adopt a strong and unequivocal stance at the Mercosur talks to ensure the protection of the Irish beef industry;

— ensure the protection and continuation of a strong decoupled direct payments system in negotiations on the CAP post-2013;

— maintain the Agri-Environment Options Scheme as a major support for environmental farming;

— recognise the importance of western counties and disadvantaged areas to farming and rural life and the need for continued support for small and medium-sized farms;

— pursue the development of food labelling and traceability;

— ensure that State agencies actively support the further development of the indigenous agri-food sector; and

— enact the fair trade legislation as committed to in the Programme for Government banning unfair trading practices in the retail sector."

I will share time with Deputies Mulherin, Naughten and Heydon.

I thank Deputy Moynihan and the Fianna Fáil Party for tabling the motion. It is a welcome departure that an Opposition party has worded a motion in a manner that seeks to secure agreement rather than score political points. I have responded with an amendment that recognises this development. While we seek minor changes for accuracy purposes - I have spoken to Deputy Moynihan about the issues in question - the amendment is based on the motion. It proposes four changes to make the motion more complete and sensible in terms of what we are trying to achieve from a political perspective, particularly with regard to the European Union.

I welcome this opportunity to outline the good news story the food sector can become in the next five years. Despite the extraordinary budgetary pressures faced by the Government which will force us to steer through difficult measures in the Estimates and budgetary processes, the agri-food, agriculture and fisheries sectors can expand in an exciting manner in the coming years.

Deputy Troy spoke about the need to incentivise the transfer of land and farm businesses from father to son and father to daughter. The best means of doing this is to offer young farmers an exciting future. This is the reason the number of young people applying to agricultural college has increased by 80% in the past three years - 28% in past year alone. At a time when young people see their options narrowing in other areas of the economy, their options in agriculture are growing in an exciting manner.

The Food Harvest 2020 document drawn up by the previous Government was one of the best things it did. My job is to use the report as a blueprint for the development of the food industry as a whole rather than its constituent parts. The aggriculture and fisheries sectors must move forward together to build capacity to service new markets, primarily abroad, and develop capacity at a primary production level on farms to be able to increase output and take advantage of and exploit the opportunities which are undoubtedly available to Ireland as a food producing island. This is the image we are trying to develop.

As has been noted, the agri-food sector is already a major industry, employing between 140,000 and 150,000 people on farms, in processing plants and areas such as marketing. In many ways, when Ireland lost its way in the past decade, agriculture and the agri-food sectors were taken for granted by the political system. They were not viewed as exciting in the way information technology or pharmaceuticals were and were not at the heart of the so-called smart economy, about which we heard so much. It is only when an economy collapses and one sets out to rebuild it following the traumatic collapse of many industries and a dramatic increase in unemployment that people start to realise that a country must focus on its core industries and what it does best. What Ireland does best is produce food better than anywhere else in the world.

We need to invest in the agri-food sector to expand the industry. Food Harvest 2020 is about developing an infrastructure that has been built up over generations during which farm families developed skill sets and farming systems. While they were often restricted, for instance, by quota systems in the dairy sector, they will have an opportunity to expand in a dramatic fashion. Food Harvest 2020 sets targets of increasing dairy production by 50% in volume terms. This will require counties such as Cork, Wexford, Waterford and Tipperary to double production over a five year period after 2015. Further targets include increasing the value of output from the beef, pigmeat and sheepmeat sectors by 25%, 50% and 20%, respectively, while seafood output is to increase in value from €700 million to €1 billion per annum. In total, the objective is to increase the volume of food production by more than one third and add value to the tune of 40%.

While these targets are ambitious, they are also realistic because they were set by the industry in its entirety. The group which drew up Food Harvest 2020 consisted of representatives from all the relevant sectors. The document is not an aspiration for farmers or companies such as Glanbia and Greencore but the culmination of an effort by the industry to work together and agree achievable targets. Markets are available to be serviced which would allow us to meet these targets. We must ensure, therefore, that we have the core resources to be able to increase output. This is, by and large, a matter of increasing exports. Last year the food sector was responsible for exports valued at €7.9 billion. By 2020, this figure must increase to more than €12 billion. We can create more than 7,000 jobs in this effort directly in the food sector and many more spin off jobs servicing the industry.

The agri-food sector has an exciting story that is emerging at a time of budgetary contraction. Next year we will spend less on agriculture and I have hard decisions to make on where to find savings. The Department is in the middle of a thorough expenditure review and I will have to make difficult decisions in prioritising the limited resources we have to spend. I will do so in a manner that will help us to achieve the targets set out in Food Harvest 2020, while protecting farmers who cannot exploit the benefits of the expansion programme owing to the limitations of their land or farms. As Deputy Moynihan stated, we need to ensure people in the west and other disadvantaged areas will continue to farm the land. This is the twin-track approach the Government must and will take. We will expand farming in a really ambitious way to build output and value, as well as finding markets in the EU and outside it. At the same time, we will prioritise the resources available to us as farm supports for those farms that need income support simply to remain viable entities. That is a challenge for us. This is not just an economic exercise; it is also a social one. It is about keeping rural economies and communities intact. I am conscious of the fact that I come from a fertile part of Cork. I am constantly reminded every week, and rightly so, by farm organisations as well as my own party members and Opposition party members, that there is a different type of Ireland that also needs to be looked after in agricultural terms. We will try to do both.

The recent AOS scheme we put in place was controversial and involved a shrinking budget. There was no budget for it, yet we put it together. As regards who will have an automatic entitlement to access the money, we have prioritised people in maturer and disadvantaged areas. After that they will be prioritised on the basis of farm size, with the smaller ones getting in first. We will continue to try to do that.

I wish to discuss some of the challenges we face in Food Harvest 2020 sector by sector. In many ways, the milk sector involves perhaps the most exciting expansion programme, but also the most challenging one. Unlike the other sectors, our output is being limited until 2015, after which we can have a dramatic expansion programme. In a ten-year programme, which is effectively what Food Harvest 2020 is about, we must achieve the dairy expansion in the second five years, unless we can get some political result concerning the issues raised in the motion - with which I agree - that would try to change what was agreed earlier.

I do not want to get into who was responsible for it, but in the last milk check it was agreed across the EU that there would be limited flexibility around expanding domestic milk quotas. As a result we have a super levy system which is preventing Ireland from expanding milk production volumes.

In the past 12 months, two other countries - Denmark and the Netherlands - have had a significant super levy applied to them. I have met the Danish and Dutch ministers to discuss this matter, as we need to put together a coalition of countries that want to expand milk production volumes. In addition, we need to persuade big countries, predominantly France and Germany, that are resistant to the kind of change we want to see between now and 2015, that it makes sense from a European perspective to allow countries that want to expand their industries to do so. That demand can be met by taking unused quota from countries that have no interest in using it in order to facilitate that transition. While we are trying to do that, we are not succeeding at the moment. I have met the Commissioner on this issue as well as discussing it briefly with the French minister, although I primarily discussed Mercosur with him. I will talk about the latter point in a minute. Last week, I spent quite a bit of time with the Danish minister who will hold the EU Presidency in six months' time. Next week, I will be in Hungary to attend an informal Council session during which we will organise a number of side meetings with a view to putting together a coalition of countries with a common interest in expanding milk quota pre-2015. We will thus try to put a strategy together that will be successful politically, although we should not take this for granted.

If young farmers from Cork to Donegal are planning to exceed their dairy quota dramatically this year, and if they are assuming the problem that will be created from a super levy viewpoint will simply be solved by me as Minister or by somebody else not producing their milk quota, they are very much mistaken. I caution such people therefore not to risk putting themselves out of business by having a super levy fine applied to them next year. We will try to resolve this issue politically and we are putting a huge effort into doing so, but it has not yet been resolved. We are at the early stages of building momentum towards a resolution in this respect, so people should be cautious and stay within quota until we can indicate otherwise. I cannot overemphasise that enough because I do not want to see ambitious young farmers, who are expanding dairy production for all the right reasons, have a significant fine applied to them next year that could put them out of business.

I welcome some of the positive developments that are happening in the dairy sector, including discussion groups. We are putting significant resources into supporting thousands of dairy farmers to share expertise and information. The reports and measurements we are getting back from that are exciting. I would encourage more young farmers therefore to get involved in dairy discussion groups. We will discuss the possibility of doing something similar for the beef sector also, which I think would be welcome.

A lot of work is being undertaken to seek new markets for Irish dairy products. Some of the exciting markets are in infant formula. We export 16% of the world's total infant formula exports and potential new markets are opening up. I will be meeting the Chinese minister for agriculture this week with a view to expanding the food sector trade between both countries. As Deputies will know, Ireland has no access to the Chinese market for beef at the moment.

Deputy Moynihan is correct that the most significant threat to the Irish beef industry at present is Mercosur. We are lucky that any offer on Mercosur in terms of a beef quota being allowed into the EU is being delayed primarily for political reasons, including the Argentinian elections. The French presidential elections next year may also have an impact, such as the lack of an offer on the table or no political deal being done. Since assuming office, I have spent much of my time warning people about the potential consequences of Mercosur, as well as calling for a study of the economic impact on the EU of such a deal. Quite a lot of detail of that economic assessment has been leaked and it is not good.

We will continue to caution strongly against the wrong type of Mercosur deal, without opposing outright the concept of trade deals between the EU and other parts of the world. A Mercosur deal cannot happen if agricultural products, such as beef in particular, are being sacrificed to get cars and financial services into South American markets. I have already made that clear.

I will finish by referring briefly to opportunities in the fishing sector. Each year about 1 million tonnes of fish are caught off the west coast, which is a commodity industry worth €1 billion. Some 88% of those fish are caught by foreign trawlers. We need to start landing an awful lot more of that catch. It is very expensive to transport it by truck from Ireland to Vigo or La Rochelle, or to take it away in a trawler's hold. We have a significant potential to develop a fish processing sector that can add value to fish caught by foreign trawlers as well as by Irish trawlers and employ thousands of people. We are working diligently to develop this sector and I will be in Killybegs to discuss it next week.

There is also an opportunity in terms of the aquaculture industry, namely, to increase the volume of fish output significantly due to the restrictions placed by the quota system for wild fish. We will be exploring this possibility. We have an exciting opportunity to expand the agrifood industry, employ many people in rural parts of Ireland who do not have many alternatives and create significant wealth that would reinforce Ireland's reputation as the best food producer in the world.

See this speech in context